The serious business of fighting fraud
19 Ionawr, 2017 | Areithiau
Hannah von Dadelszen, Joint Head of Fraud, delivered a speech at the Fighting Fraud and Eliminating Error Conference today.
It is a pleasure to be here today to address you on matters relating to fighting fraud. I have to confess that although the topic of this conference is Fighting Fraud and Eliminating Error, I am going to focus on the fraud limb of that topic and rather ignore error component. The SFO’s fight is focussed on fraud, but not on eliminating error, and I will leave it to someone else who is an expert on error to address you on that matter. Instead, I am going to tell you about what the SFO does, how we do it, and what is special about us which makes us good at what we do.
The Serious Fraud Office exists to tackle the most serious or complex cases of fraud, bribery and corruption. Bribery and corruption is of course a type of fraud, and the two very often go hand in hand. Our role is to investigate, and where appropriate prosecute those cases. We only deal with the most serious cases, and those cases are defined by our statement of principle, which includes a consideration of the following factors:
- whether the apparent criminality undermines UK PLC commercial or financial interests in general and in the City of London in particular,
- whether the actual or potential financial loss involved is high,
- whether actual or potential economic harm is significant,
- whether there is a significant public interest element, and
- whether there is new species of fraud
Our cases, by their very nature, are complex, resource intensive and therefore lengthy.
Years ago, the SFO used to have a criteria that the case had to be worth over £1million. Well, that became rather like Dr Evil being cryogenically frozen in 1967 and then reawakened in 1997 only to hold the world to ransom for $1million. One million pounds is not what it was. The upshot is that the monetary threshold is gone, and we instead focus overall seriousness and complexity of the case.
We have some of the most high profile investigations in the UK today. Currently, we have investigations concerning Rolls Royce (the investigation into the individuals continues), Unaoil, Libor, Airbus and Tesco. And those are just a few of the cases I can refer to. There are others on our books which are not public information.
We are not a regulator. We are not an educator. But we are investigators and prosecutors. And digital forensic experts. And proceeds of crime experts. The Director has said to audiences previously that we are not in the business of telling you how not to rob a bank, and it is for this reason that I can’t stand before you today and tell you how to prevent fraud in your departments and agencies. You are the expert in the detail of your workplace, and it seems to me that you probably know the vulnerabilities that exist within it. What I can tell you is how we go about investigating a case, and I would also like to tell why we are best placed to do the type of work we do.
The SFO operates under a model called the Roskill model. Lord Roskill was chairman of a committee set up in the 1980s to look at ways to improve the investigation and prosecution of complex fraud cases. The recommendation made in the resulting report gave rise to the SFO. The report recommended that investigators and prosecutors be brought together under one roof to get the benefits of both professions throughout the life of the investigation and prosecution. This model of working was established because of concerns about the effectiveness of large scale fraud investigations conducted by non-specialist agencies. The SFO was set up to specifically deal with serious and complex fraud and bribery and corruption cases. Today, we are still unique in the way we work in that our lawyers are not hived off into a separate team, but are integrated into the investigation at the outset.
So how do we handle a case? Of course every case is different, but we have strategies that we think are the best way to approach matters.
Firstly, each case goes through a rigorous vetting process before it is accepted by the Director. We have a very strong intelligence team consisting of analysts, investigators and lawyers, who will trawl over a case before it is even accepted for investigation. They will look at the known facts, highlight the gaps in our knowledge, and make a recommendation about whether it meets our statement of intent for acceptance. We have a very clear statement of intent, which I discussed earlier, which means that all incoming cases are measured against these criteria. There are other investigating agencies to deal with cases which do not meet our criteria. The Director himself looks at each case and decides whether or not it should be accepted. It is extremely important that we are taking on the right types of cases – the most complex and serious – because it enables us to reinforce our “priority” principle.
The priority principle is this. Priority means we have single focus on this particular type of crime rather than having it as one of many competing priorities. Our clear and aligned strategy is to investigate and prosecute serious and complex fraud, bribery and corruption. As an investigator or as a prosecutor, there are always going to be “quick wins” or low hanging fruit. In an environment where these quick wins exist alongside the more complex cases, it is fairly inevitable that resourcing demands and a desire for results will mean that the quick win cases are dealt with, and the more serious and complex cases will be de-prioritised. For us, quick wins, or low hanging fruit, aren’t an option. Our mission is to tackle top tier economic crime. We focus on those case that other agencies are simply not able to take on. We are not asked to take on cases of a range of complexity. The SFO does not suffer from that condition. Our specialism means that all we do is serious and complex.
Secondly, each case is led by a case controller. A case controller is a senior role, and can be filled by either a lawyer or an investigator. They are competitive roles and hard to get. We have good people in them. Case controllers are experienced investigators or lawyers who know how to deal with SFO cases. The case controller has control of and responsibility for the case, and answers to the Head of Division. The case controller will set the investigative strategy for the case. The investigative strategy will look at sources of information, methods of obtaining it, overseas jurisdictions interest and most importantly, identify the suspects.
Thirdly, the case controller has a case team which will consist of lawyers and investigators at varying grades. We do not separate the lawyers into another department. Lawyers are actively part of the investigation and will be involved in every level of decision making. Lawyers conduct interviews. Lawyers help develop investigative strategy. Lawyers are involved in searches and search warrants. Equally, investigators are very often involved in legal decision making – their contribution through their knowledge of the evidence and understanding of the criminal justice system, can be equally significant.
Fourthly, and very importantly, the SFO has made a very conscious strategic decision to invest a significant amount of resource in training our investigators. We believe that counter-fraud investigation is a profession, and that there are specific skills and training required in order to be successful at it. I would like to tell you a little bit about what we are doing in that regard.
We have just commenced an ambitious comprehensive trainee investigator programme at the entry level grade. We have employed a dedicated training manager. You may be interested to know that we had 2000 applicants for that programme. We have appointed 12 successful candidates who started on 3 Jan this year. The will be provided with extensive coaching in our interview training programme, as well as tailored training on fraud, bribery and corruption, section 2 Criminal Justice Act powers, information handling, intelligence, banking analysis, witness statement drafting, searches, and personal safety, to name just a few. The trainees will spend about 18 months undertaking this training and will undertake rotations through the different divisions within the SFO. At the end of 18 months they will have collated a workbook of the work they have done, and they will sit an interview, All going well they will move up a grade. That means promotion in under 2 years. Now that it is brilliant opportunity for those trainees, and with that structure in place it is likely to significantly reduce the time they would otherwise spend at entry level. It also means we as an organisation have a plan for staffing our future.
It may also be of interest to you that the standards for that trainee investigator programme have been agreed with the cabinet office, and have been externally assessed and quality checked. We have also devoted considerable resource to training the internal assessors. All of this work underpins are commitment to development of a counter-fraud profession for investigators.
Ultimately we need to attract good people to the investigator roles in order to make the training programme work. But it is a chicken and egg scenario; having this programme will mean good people want to come and work for us. And we hope the career progression element of the programme will mean that when they come to us, they will want to stay and be part of the work we do for significant period of time.
So how effective are we? Well, like with most statistics, it depends on how you analyse them. Trials tend to be few in number and last up to 3-4 months. Years and years ago I had an eight month trial for two defendants at Blackfriars Crown Court – that wouldn’t happen anymore. In 2015-16 only 6 defendants in 4 cases were convicted, which mean we had an unusually low conviction rate of 32 %. However, if you look over a longer period, between 2012 and 2016 the conviction rate was 65% per defendant and 81% per case, with 75 defendants in 25 cases convicted. If you want to look at outcomes in specific cases, we publish that information on our website under the “our cases” tab.
To those critics who think that those conviction rates are not high enough, I say this. If you want 100% conviction rate, move to Belarus. We cannot guarantee conviction, but we can get our cases past half time. After that, it’s up to the jury. Our case load is such that we don’t have hundreds of cases in court per year. In order to get a statistically significant sample you need to look at more than one year. Conviction rates fluctuate per year, but to my mind, our conviction rates are what one might expect with these types of cases. I also think that the cases that we deal with would be unlikely to even get to court without the existence of the SFO. The have be difficult cases to even be on our books. That is what we are here to do, and it is what we will continue to do. We don’t shy away from complex issues.
Turning back to the mechanisms we deploy to investigate and prosecute cases, the fifth point I want to raise is the issue of international liaison. Most of the cases we investigate require international enquiries. Like any other prosecutor, we write letters of request and get help from other jurisdictions. We also provide assistance to other jurisdictions in response to their letters of request. However, we have sought to go further than simple mutual legal assistance requests. We have established direct personal relationships with a number of key international partners. In some instances we have secondee in those offices to assist with the development of the relationship. What this translates to in fact in an extremely important relationship which is conducive to effective international partnering. International enquiries are dealt with much more quickly and efficiently due to this model of working. Partly this works so well because of the Roskill model with lawyers and investigators in the same teams.
I thought it might be useful to discuss some of the statutory powers the SFO has, and how we use them. The SFO was created by statute – the Criminal Justice Act 1987. Contained within section 2 of that Act are a number of powers that we regularly deploy in investigating our cases. Section 2 of the Criminal Justice Act gives us the power to compel the production of documents from people. It also gives us the power to compel people to answer questions. We also have gateways for the supply and receipt of information across government and other law enforcement agencies. Some of you from other investigation organisations may have similar powers. By and large those powers work well in progressing our cases. There are limits to being able to compel people to answer questions. Obviously, we cannot compel people to speak then use that evidence against them in a prosecution. That would infringe the right to be protected from self-incrimination. We also cannot compel the production of documents which are subject to LPP. We often have very extensive arguments about whether documents are in fact protected by LPP, but if they are, they are immune from our powers.
Section 2 of the Criminal Justice Act also contains a provision allowing for the prosecution of any person who, knowing or suspecting that an investigation by the police of Serious Fraud Office into serious or complex fraud is being or is likely to be carried out, falsifies, conceals, destroys, or otherwise disposes of documents which he knows or suspects would be relevant to such an investigation. You might imagine that it would be a fairly unusual case where we could prove those circumstances. Well, let me tell you about a recent case the office has prosecuted under this head. In this case, which is detailed on our website, Mr Kingston was found guilty of two offences under this section of the Act. Mr Kingston was a suspect in a large bribery and corruption investigation. He had been previously arrested and released in relation to that investigation. He was then served with a notice requiring him to surrender two mobile telephones. Instead of handing the phones over, the SFO was informed that one had been dropped down the loo by accident. The other was lost. Coincidentally, Mr Kingston was able to get up and running with a new mobile phone he had to hand a minute or so after the phone went swimming. He was charged. Mr Kingston protested his innocence, but a jury thought otherwise. He is now serving 12 months at Her Majesty’s pleasure.
Having given you that organisational overview, I thought you might be interested to hear some personal comments from me about life at the SFO. I think the quality of work as a lawyer has been second to none. The case work is some of the most interesting available in the UK. I also think that given our priority principle, I have had the time and resource needed in order to progress those cases. Life in the civil service requires a significant commitment to public interest and policy. All of you hopefully share that interest.
On that note, I will finish up by saying that fighting fraud is no easy task. Suspects and defendants are increasingly well resourced and clever, and we need to be as well. The SFO has attempted to create the best environment to foster integrity, professionalism and effectiveness to enable us to engage in that fight. If that sounds interesting to you, look us up. You won’t regret it.